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China possibly uses excessive forex reserves for oil reserves

www.chinanews.cn 2006-04-13 17:30:24

Chinanews, Apr. 13 �C A research team on the national macro-economy under
the State Development and Reform Commission recently suggests that
Chinese government currently need to pay attention to economic changes in
four aspects, the co-existing of over production capacity and over
liquidity, the ever increasing pressure on deflation and unemployment,
and deviation of M1 and M2 money supply growth. The advisory team says
China can consider transforming the excessive foreign exchange reserves
for some national strategic supplies such as oil reserves.
A report from the China Securities Journal said that in the short term,
the recent round of economic boom was over, as major industries, such as
steels, auto, chemistry, and energy production, had begun to slow down in
investment and production prices had started to fall. Over production
capacity has begun to show in these industries and industrial revenues
begun to drop. Investment in real estate market and real estate
consumption have also cooled down significantly.
The research team added that investment by local governments were still
strong at the moment, which became a large adverse force against the
declining market trend.

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